Tag: politics

Why Gender Pay Gap Data Mislead Us: Understanding The Dynamics Behind The Numbers 

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The gender pay gap index is often perceived as a clear and straightforward indicator of inequality: the lower the gap, the more equal a society must be. Yet, when looking at European data, this assumption immediately breaks down. Countries widely recognized for their strong gender equality, such as Finland and Denmark, show some of the highest gender pay gaps in Europe, respectively of 16.8% and 14.0% in 2023. Conversely, Southern European countries, typically portrayed as less advanced in terms of labor equality, often show lower gaps, such as 2.2% in Italy, 5.1% in Malta and 8.6% in Portugal.

Figure 1: The unadjusted gender pay gap, 2023 (difference between average gross hourly earnings of male and female employees as % of male gross earnings). Source: Eurostat 
Figure 2: Gender Equality by Country, 2025. Source: World Population Review 

This counterintuitive pattern raises a key question: why do some of the most gender-progressive countries display such large pay gaps? 

Understanding the answer requires unpacking what the gender pay gap actually measures and how structural factors shape the interpretation of the data. 

A counterintuitive European puzzle: how labor participation affects the gender pay gap 

According to Eurostat, the gender pay gap represents the average difference between male and female hourly earnings across an entire economy. However, this “raw” indicator does not adjust for variables such as employment rate, seniority, working hours, occupation, or industry composition. As a result, countries with very different labor market structures can produce misleading pay gap figures. 

In the European context, Nordic countries display among the highest female labor participation rates in Europe. In Sweden and Finland, around 75-77% of working-age women are employed, compared to roughly 52% in Italy, according to the Eurostat data for 2021. This fundamental difference has two statistical consequences:  

(1) More women participate across many sectors, including high-paying but male-dominated private industries, where pay disparities are more apparent.  

(2) In low-participation countries, many women who would earn less or face structural disadvantages simply do not appear in the labor market statistics. 

This means that a “low pay gap” can reflect fewer women working, not more equal pay.

Figure 3: Female labor force participation rate in Europe, 2024 (the average for 2024 in the European countries was 54.19%.The indicator is available from 1990 to 2024). Source: The World Bank 

Structural factors shaping the gender pay gap  

A low pay gap may also reflect structural constraints, cultural norms, or barriers that discourage women from entering specific sectors, or even from participating in the workforce altogether. In Italy, for instance, women are underrepresented in high-earning private-sector roles but are comparatively overrepresented in stable public-sector professions, where pay scales are more regulated. This combination tends to compress wage differentials and therefore “artificially” decrease the gender pay gap. 

By contrast, in Nordic countries women participate across a wide range of sectors, including those with substantial wage dispersion. This results in a broader and more accurate representation of gender differences in earnings. 

In this sense as well, a low pay gap is not inherently a sign of gender parity. 

The role of part-time work and occupational segregation 

A third major factor explaining the higher gender pay gaps in Northern Europe is the prevalence of part-time employment among women. According to Eurostat, countries such as the Netherlands and Denmark have some of the highest female part-time rates in Europe, compared to Southern European countries like Portugal, Greece, or Spain. Part-time jobs tend to be paid less per hour, offer fewer opportunities for career progression, and limit access to high-responsibility roles. Although part-time work in these countries is often facilitated by supportive family policies and may be a voluntary choice, it nevertheless contributes significantly to the gender pay gap. 

This pattern results in greater salary divergence between genders, even in settings where equality norms are strong.

Figure 4: Part-time Employment in Europe, 2021. Source: Eurostat 

The Nordic Gender Equality Paradox: when generous policies widen the gap 

One of the most discussed phenomena in economic literature is the Nordic Gender Equality Paradox. Although, as previously mentioned, Nordic countries consistently lead global rankings on gender equality, research by the National Bureau of Economic Research (NBER) has shown that highly generous parental leave policies can unintentionally amplify long-term differences in earnings. 

In countries such as Sweden, Denmark, and Finland, parental leave systems are among the most comprehensive in the world. While these policies ensure high levels of family wellbeing, they often result in women taking longer leave periods than men, leading to a slower re-entry into the labor market. This does not suggest that generous welfare policies are harmful; rather, it highlights how well-intentioned reforms can produce unintended labor-market outcomes when uptake remains uneven across genders. 

In Nordic countries, despite continued efforts to encourage paternity leave, women still take the vast majority of parental-care responsibilities. This persistent imbalance shapes career progression and contributes to long-term differences in lifetime earnings trajectories. 

Why public perception gets it wrong 

Public understanding of the gender pay gap is often shaped by simplified narratives, headlines, or assumptions based on cultural stereotypes about specific regions. Surveys conducted by the Pew Research Center show that people tend to overestimate gender differences in some contexts and underestimate them in others. 

Many assume that Nordic countries must have both high labor equality and low pay gaps. While this is true in some dimensions, such as political representation, education, and labor participation, pay gaps capture a more complex picture involving sectoral structures, parental leave, part-time work, and long-term career dynamics. 

Similarly, countries with low pay gaps are often assumed to be more gender equal, even though low participation rates, lack of childcare infrastructure, or rigid labor markets may paint a very different picture. 

This disconnection between perception and reality underscores the importance of interpreting gender statistics with nuance and understanding what each indicator actually measures. 

Conclusion 

The gender pay gap is a useful measure, but understanding what underlies it is essential. As European data shows, a low gap does not automatically signal high equality, nor does a high gap inherently indicate poor conditions for women. Instead, the gender pay gap must be interpreted within the broader context of labor participation, occupational patterns, welfare policies, and family dynamics. 

Nordic countries exhibit higher raw pay gaps because their labor markets include almost all women, across all sectors, roles, and wage bands, and because generous parental leave policies influence long-term earnings. Southern European countries show lower raw gaps largely because fewer women work and those who do tend to be concentrated in more regulated sectors. 

A nuanced interpretation is therefore essential. Understanding the mechanisms behind the numbers allows policymakers, students, and future professionals to build a clearer picture of labor market inequalities. Only by looking beyond surface-level statistics can societies meaningfully address the structural causes of wage disparities and design interventions that move beyond appearances toward real equality. 

Sources: Eurostat; OECD; The World Bank; CEPR – VoxEU: The Nordic Model and Income Equality: Myths, Facts and Policy Lessons by Mogstad M., Salvanes K. G., & Torsvik G.; World Bank Group, Gender Data Portal; European Commission; The World Economic Forum, Global Gender Gap Report; The Economist: A Nordic Mystery; National Bureau Of Economic Research: The Child Penalty Atlas by Kleven H., Landais C., & Leite-Mariante G.; Pew Research Center, Global Attitudes on Gender Equality. 

Margherita Ottavia Serafini 

Writer

Zohran Mamdani: A New Order? 

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Zohran Mamdani was recently elected as the first socialist mayor of New York City last month. The city of Wall Street, billionaires and neoliberal globalization has just chosen a man who ran on a platform of housing justice, public transit, and redistributing wealth. “This isn’t just about New York,” Mamdani said during his victory speech in Queens. “It’s about imagining a different kind of future” (The New York Times, 2025). 

NYC’s position as the United States’ largest city, and  one of the world’s financial centers, is a strange bedfellow for an openly socialist politician. Some claim Mamdani’s victory represents the end of the neoliberal order within its home, yet others see it as a temporary response to exhaustion and inequality. However, it has opened a cultural conversation that stretches across the nation.   

Mamdani outside a New York bodega. Credit: Getty Images 

A Socialist in Finance’s Capital 

New York has always been a paradox: the home of billionaires and of the homeless, of high art and unpaid internships. Its contradictions are almost part of its brand. Yet it has recently gone through rapid change. The global financial center of the 1990s, of hopeful entrepreneurs and mid-western dreamers who wanted to make it big, has been lost. In its place is an almost dystopian reality: crime, economic hardship for most, abusive rents with frozen salaries, and an air of tension and distrust of institutional change. Yet here was Mamdani.     

Mamdani, born outside the US to an immigrant family, has spent years advocating for tenants’ rights and public housing (Burgis, 2025). His campaign focused on simple and popular ideas like rent freeze, free public transport, and reorienting city budgets towards public welfare (Reuters, 2025). In many ways, his election is the culmination of a cultural shift rather than a sudden revolution. Young voters, especially those under 35, have grown tired of capitalism’s unfulfilled promises. Rising costs of living, precarious work, and the digital age have made “socialism” no longer sound like a dirty word for American citizens (Pew Research Center, 2022). But was this truly a vote for socialism? Or simply a rejection of what came before? 

Exhaustion and its Opportunity 

Political scientist Michael Sandel once wrote that “populism arises when people feel humiliated by meritocracy” (Sandel, 2020). In New York, that humiliation took the form of unaffordable rent, crumbling infrastructure, and the sense that “success” was something reserved for the already successful. Analysts at The Atlantic argued that Mamdani’s victory was not a pure ideological triumph, but a reaction to systemic fatigue (The Atlantic, 2025). After decades of centrist mayors managing the city like a corporation, voters simply wanted something different. 

Even Mamdani’s critics concede that his authenticity played a role. He biked to campaign events, and refused large corporate donations (The Guardian, 2025). Instead, he built a strong grassroots support, being present in communities, engaging with his support base directly, and being present. For many disillusioned citizens, he felt real. This presence helped bridge the gap between the voters’ perception of socialism. Mamdani’s win reflects that broader transformation. He talks less about class war and more about “belonging”. An emotional register that resonates in a fragmented digital age, especially with younger voters. 

According to The New Yorker, his speeches mix activist language with pop-cultural references, a blend that feels “as Brooklyn as it is Marxist” (The New Yorker, 2025). This approach has helped him reach not only traditional leftists but also creative professionals and students who see themselves as progressive but not radical.  

Mamdani at his election rally, November 2025. Credit: Victor Llorente for The New Yorker 

A Collapse or a Shift? 

Is this the collapse of neoliberalism? Probably not. Neoliberal logic of competition, privatization, individualism still runs deep in American institutions. But culturally, the conversation has shifted, at least in urban areas. Mamdani’s rise suggests that alternative narratives are gaining legitimacy, especially among younger generations who grew up during crises rather than booms. 

When news of Mamdani’s election started appearing, some warned of market instability. Yet the stock market barely moved (Bloomberg, 2025). Finance is apparently extremely pragmatic: as long as Mamdani doesn’t impose sudden regulation, Wall Street stays stable. So far, his administration has taken a targeted approach by ending some luxury tax breaks, introducing rent caps, and expanding public transport funding (City Journal, 2025). These policies are ambitious but far from revolutionary. 

The US is still the economic powerhouse of the West, yet it is more apparently buckling under its own weight. Political tension is the highest it has been in the last 50 years, and it seems like something is brewing. Yet at the same time, its liberal institutions function in a similar way to capitalism: they allow voters to set the stage. The liberal order is strong in that way, it allows slightly different political ideas to test themselves in localised regions, before reabsorbing them into the fold. Mamdani’s politics are more democratic than socialist, and will not break with the Democratic’s party line of liberal democracy. Instead, he will serve as a political counterpart to conservatives in Washington DC: the new wunderkind, the shining light for democrats to follow.  

Bernie Sanders, Zohran Mamdani and Alexandria Ocasio-Cortez, the most prominent left-wing politicians of the Democrat Party, holding hands at a rally. Credit: ABC News 

Zohran Mamdani’s victory might not herald a new economic order, but it undeniably represents a new cultural mood: one where ideals of solidarity, justice, and public life are being reimagined. Can capitalism be “reformed” from within? Or must it be replaced by something else? Mamdani ‘s New York will prove a natural experiment for both questions. 

Sources:

Lucas Bernal  

Writer

Another War Arriving

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Since the beginning of the year, relations between the United States and Venezuela have entered a particularly volatile phase. What began as U.S. efforts to counter alleged drug-trafficking networks operating out of Venezuela has escalated into a broader strategic standoff. Accusations, military posturing, and legal claims about sovereignty and intervention have sharpened the conflict and raised questions about international law, regional stability, and the future of U.S.–Venezuela diplomacy.

Image 1- Protest in Venezuela against U.S. actions. 

How the Crisis Started 

Since the beginning of his term, the Trump administration has linked Maduro’s regime to drug trafficking into the United States and the related problems these substances cause, such as crime and the growing influence of cartels. In 2020, during Trump’s first term, the Department of Justice issued a press release charging Nicolás Maduro and other senior Venezuelan officials with narco-terrorism, drug trafficking, and corruption. This shows that since his first term, Trump has associated Maduro with the drug trade and its consequences for the American population. This year, the White House decided to take more serious action regarding Venezuela. In August, Attorney General Pam Bondi decided to double the reward for information leading to Maduro’s arrest to $50 million. Soon after that, a stronger stance was adopted: an attack. On September 2, the U.S. Navy announced a strike on a vessel allegedly departing Venezuela and engaged in drug smuggling. The attack resulted in the deaths of 11 people and was seen as the first warning to Venezuela. Since then, the U.S. government has significantly expanded its operations in the Caribbean region, especially near Venezuela. For example, the Pentagon deployed an aircraft carrier group and other naval assets to the southern Caribbean as part of what the U.S. frames as “anti-narcotics operations.” 

The goals of the Trump administration 

As mentioned before, the U.S. describes the goal of this operation as a firm and protective stance against drug and crime cartels operating in the country. However, there might be other motives. Intelligence agencies—especially the National Intelligence Council—report that there is no conclusive evidence directly linking Maduro’s leadership to a centralized trafficking network. They also point out that Venezuela is neither a major cocaine nor fentanyl producer, nor a key transit point in narco-trafficking routes to the United States. This suggests that the White House has additional goals behind the operation. In addition to attempting to oust Maduro and push for regime change—intentions already hinted at publicly by the U.S.—two other motives stand out: asserting American strategic influence in Latin America and trying to gain leverage over Venezuela’s natural resources. The first comes from the growing Chinese economic and diplomatic involvement in the region. This has unsettled the Americans, and they have now adopted a new approach: align with Washington and receive benefits (as in Argentina’s case) or deviate and face costs, as happened with both Venezuela and, to some extent, Colombia. The second motive comes from suggestions that access to Venezuela’s vast oil and mineral resources is a secondary but key motive for this posture toward the South American country. For example, discussions allowing U.S. companies to regain access have appeared in reports surrounding the escalation. 

Image 2- Oil Reserves possessed by Venezuela

Venezuela’s reaction  

The Venezuelan government, led by Nicolás Maduro, has reacted strongly to all the U.S. moves and operations so far, treating them as a direct threat to national sovereignty and hinting at possible retaliation. Caracas has accused Washington of seeking regime change under the cover of a drug-war campaign. Seeing the need to be prepared, Venezuela is reportedly seeking military assistance from countries such as Russia, China, and Iran, requesting radar systems, aircraft repairs, and missile supplies to bolster its defenses. Maduro justifies these measures as necessary and has deployed warships, surveillance drones, and over 15,000 troops along Venezuela’s Caribbean coast and its border with Colombia. He has even called on civilian militias to enlist and train as part of a national defense posture, declaring, “In the face of this maximum military pressure, we have declared maximum preparedness for the defense of Venezuela.” Maduro also added that this was in response to the “eight military ships with 1,200 missiles and a submarine targeting Venezuela.” His Foreign Minister, Yván Gil, brought the matter to international forums, telling the United Nations that the U.S. deployment is “an illegal and completely immoral military threat hanging over our heads.” Caracas is thus positioning itself as being under siege by U.S. power, shifting the narrative away from drug trafficking and toward foreign aggression. He added that, according to UN data, only about 5% of cocaine exports allegedly pass via Venezuela, calling the U.S. narrative a “false narrative” aimed at regional destabilization. 

Image 3- Members of the Venezuelan army in a protest near UN headquarters in Caracas

International Reaction and Regional dilemma  

From the United Nations to Russia, these tensions have prompted a wide range of responses. The United Nations has repeatedly urged restraint by both the U.S. and Venezuela, warning that the military build-up and strikes risk regional peace and stability. For example, the UN noted that U.S. military deployments began in August 2025 and said any measure to counter trafficking must respect international law. In addition, at a UN Security Council meeting, multiple member states voiced concern; even some U.S. allies, such as France, Denmark, and Greece, joined the call for de-escalation and dialogue with Venezuela. Beyond the UN, both Russia and China have strongly condemned the U.S. military actions near Venezuela, calling them an “excessive use of force” and a violation of international law while reaffirming support for Venezuela’s sovereignty. Both countries maintain strategic energy and military ties with Venezuela, seeing the country as an important ally in the geopolitical chess of the region. Other reactions have come from the Caribbean states caught between support for U.S. anti-drug efforts and concern about militarization near their region. For example, Trinidad and Tobago’s Prime Minister aligned with U.S. security rhetoric, which drew both domestic support and regional unease. Brazil, for its part, is attempting a delicate balancing act: on one hand, it criticizes Venezuela’s democratic shortcomings (especially regarding elections and human rights), while on the other, it opposes external military intervention—such as by the U.S.—emphasizing sovereignty and the potential destabilization of the region. 

To sum up, the U.S.–Venezuela confrontation in 2025 has evolved from economic and diplomatic pressures into a much more confrontational and militarised phase. While the United States frames its actions as part of a fight against narco-trafficking and terrorism, Venezuela regards them as imperialistic and aimed at toppling the regime. With legal, military and diplomatic stakes rising, the risk of miscalculation or escalation is significant. All now turn to South America, a continent that has not seen an interstate military conflict since the 1990s, as it faces the alarming prospect of becoming the next front in this war-torn world. 

Sources:

 

Guilherme Mendonça  

Writer

Risk Repriced: How Political Instability Reshapes Market Confidence and Sovereign Costs 

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When Markets Look At Politics 

We are used to thinking of financial markets as driven only by economic principles such as inflation, interest rate expectations, and growth forecasts. In this context, politics is background noise: unpredictable, difficult to quantify, and irrelevant to asset pricing. Yet this perception increasingly misrepresents reality. 

Political developments have become central to how markets interpret risk, reprice assets, and allocate capital.  

Nowadays, headlines from governments regularly trigger revaluations. Political uncertainty is growingly emerging as a source of volatility and a key determinant of sovereign borrowing costs. Every new cabinet announcement, legislative halt or budget negotiation is a signal investors have to price, quickly and with little margin for error.  

The uncertainty about future government actions may have a dual effect on market prices. In rare cases, it may represent policy flexibility against shocks. But in the majority of cases, it may actually reflect growing doubts about institutional resilience and future fiscal tracks. 

The market impact is clear: as stock prices respond to political news, political uncertainty leads to higher equity risk premium, increased asset correlation and consequently lower diversification benefits. 

To better understand how political turmoil can flow into financial markets, we can have a look at the most recent case: France. 

The French Distress 

In October 2025, France dived into a serious political turbulence after the resignation of Prime Minister Sébastien Lecornu just one day after announcing his cabinet. It’s the collapse of the fifth prime minister in just two years, a statistic that points out not just instability but a deeper fracture in the French political system. 

Public surveys reveal despair, pessimism and distrust as the prevailing feelings in French citizens. Worrying symptoms representing the profound current democratic crisis, not even two years ahead of the next presidential election.  

Financial markets, never known for patience but for how quickly they react, are clearly reflecting investors’ sentiment. Not surprisingly, French equity indices dropped, and bond markets did not do differently. For instance, yields on the 10-year French government bonds skyrocketed by 7-8 basis points, reaching around 3.58%.  The spread between French and German bond yields broadens as investors demand a premium for holding what they see as riskier sovereign debt.  

Figure 1: The yield gap widened sharply amid French political turmoil, reflecting rising investor risk premia on French debt. 
Source: LSEG via Reuters. 

The reason for this reaction? The answer is not that straightforward. No single event triggers the repricing by itself, but the clear loss of confidence in France’s fiscal policies plays an unequivocal role. The situation in France is getting complicated, both politically and economically.  

The general feeling speaks loud: France looks unable to find its way out of this malaise.  

Shifting Benchmarks 

Historically, France was perceived as relatively safe within the Euro area bond markets. Italian bonds, instead, have been telling a different story so far. Yet, trends are changing.  

Figure 2: French (red) and Italian (green) 10-year government bond yields nearly converged in late 2025, reflecting France’s political turmoil (rising yields) versus relative stability in Italy (falling yields). Source: LSEG via Reuters. 

As French borrowing costs have risen, Italian yields have followed the opposite direction. This shows how perceptions around France, once considered a core market, and Italy, long seen as one of the weakest ones instead, have radically changed. Investors are concerned that France will not be able to improve its fiscal position due to its political instability, thus pushing up its bond yields. Different story for Italy, where relative political stability and downward debt forecast have caused its bond yields to decrease.  

But be careful. For some, the narrowing of the French-Italian bond spread has more to do with French fiscal and political distress than an improvement in Italy’s market.  

Italy has been afflicted by chronic problems that will take a long time to fix. We are still talking about the euro zone’s second-largest debt as a percentage of GDP after Greece, with a growth of the economy being obstructed by a concerning falling population and low female employment.  

Still, the convergence of French and Italian bond yields serves as a striking illustration of the implications of political stability and credible budgeting on investors’ confidence.  

Indeed, global investors nowadays look at governance quality in advanced economies pretty much as economic principles to adjust their required returns. 

Impact On Growth And Market Confidence 

Beyond market volatility, political instability carries important long-term economic costs. Empirical research on advanced economies has demonstrated that an uncertain politics can cause delayed investment decisions, hard policy execution, and undermined growth prospects. In fewer words, high levels of political instability can overall cause worse economic output. 

The reasons are pretty intuitive: when governments are fragile or policy direction is unclear, businesses and consumers lose confidence. Private sectors struggle to create expectations, while public institutions turn less effective in providing structural reforms.  

But as fragmented governments are not able to enact reform, public finances deteriorate. In France, the continuous change in leadership has paralysed the adoption of a new fiscal regime, delaying important decisions on expenditure and taxation. This creates a dangerous loop: as fiscal negligence decreases investor confidence, sovereign borrowing costs increase, which displace public spending, which in turn further constrains the ability to enact future reforms.  

France, for instance, has gone through five prime ministers in just two years, its national debt exceeding €3 trillion, and it seems unable to create a credible path towards fiscal balance.  

Figure 3: France holds the third-highest debt burden in the EU, after Greece and Italy, exceeding 110% of GDP. 
Source: Eurostat.

Globally, the political instability of an advanced economy as France can have both negative and positive spillover effects on other regions as well. On one hand, investors may require higher risk premiums also from other countries perceived as politically vulnerable. On the other hand, such instability may cause a flight-to-quality flows, as capital would flow towards safer bonds such as Germany Bunds or U.S. Treasuries.   

However, the coincident fiscal crises in multiple large economies, might result in a broader reallocation of global capital away from equities and emerging markets, thus potentially threatening global growth. 

Institutions such as the IMF and OECD have pointed out how political stability and consistent fiscal policies are not only priorities at the domestic level, but also the foundations of international market confidence and macroeconomic resilience. 

Conclusion 

What France is going through right now is not just a domestic drama. We are using this case as an understanding of what can be the costs of institutional fragility in a period of high debt and fiscal uncertainty. When governments and their reforms falter, consequences can be urgent: higher borrowing costs, downgraded credit ratings, eroded currencies, and constrained growth.  

If investors would once see political risk as background noise, now they price it in their models and we need to discuss it. The bond market has become a criterion of credibility, which rewards discipline and punishes obstructions.  

The message to policymakers is clear: good governance is capital. Stability, transparency, and consistency are no more mere abstract democratic values, but economic assets bringing yield. We are still in a post-pandemic context with high interest rates and insecurities, and policy incoherence is no longer tolerated. 

Preserving market trust is vital. Governments must now handle both budgets and expectations. Credibility can be the cheapest form of stimulus for those countries facing high debt and structural change. And as France is showing, once lost, it becomes the most expensive asset to restore. 

Sources: Reuters; Euronews; Financial Times; Fitch Ratings; Eurostat; LSEG via Reuters; IMF; OECD; ECB; Political Uncertainty and Risk Premia, by Lubos Pastor & Pietro Veronesi; European Journal of Political Economy; Political Instability and Economic Growth: Causation and Transmission, by Maximilian W. Dirks & Torsten Schmidt.

Rebecca Fratello 

Writer

US Aid Cuts Jeopardize Global HIV Prevention Efforts

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In early 2025, the Trump administration implemented significant cuts to U.S. funding for HIV prevention programs, both domestically and internationally. These reductions have raised alarms among global health experts, who warn of potential setbacks in the fight against HIV/AIDS.

Impact on Global HIV Prevention

The U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) has been a cornerstone in the global response to HIV/AIDS, providing two-thirds of international financing for HIV prevention in low- and middle-income countries. Since its inception in 2003, PEPFAR has saved over 26 million lives by investing in critical HIV prevention, treatment, care, and support programs across 55 countries.

However, a 90-day pause in U.S. foreign development assistance, initiated on January 20, 2025, disrupted these efforts. Although a waiver was issued to allow the continuation of life-saving humanitarian assistance, including HIV treatment, the pause created confusion and disrupted services at the community level. In Ethiopia, for instance, 5,000 public health worker contracts and 10,000 data clerk positions, crucial for HIV program implementation, were terminated.

The Global HIV Prevention Coalition warns that if U.S. funding is not restored, there could be an additional 8.7 million new HIV infections among adults, 350,000 among children, 6.3 million AIDS-related deaths, and 3.4 million additional AIDS orphans by the end of 2029.

Domestic Consequences

Domestically, the Centers for Disease Control and Prevention (CDC) has faced significant budget cuts, particularly in its Division of HIV Prevention. An analysis by amfAR indicates that increased funding to this division was associated with a nearly 20% reduction in new HIV infections across the U.S. between 2010 and 2022.

The proposed cuts threaten to reverse this progress. The CDC’s HIV prevention funding, which totaled about $1 billion in FY2024, supports state and local jurisdictions in conducting health surveillance and targeting communities effectively. Reductions in this funding could lead to increased HIV incidence, with negative implications for individual well-being, public health, and healthcare costs.

Organizational Restructuring and Layoffs

The administration’s broader restructuring efforts have also impacted HIV prevention. The CDC is undergoing a major reorganization, with several divisions, including those focused on HIV, set to become part of a new entity, the Administration for a Healthy America (AHA). This move follows significant downsizing, with the CDC workforce reduced by 3,500 to 4,000 through early retirements and layoffs.

Additionally, the Presidential Advisory Council on HIV/AIDS (PACHA) is being overhauled, with all members removed and no timeline provided for appointing new ones. These changes have raised concerns about the continuity and effectiveness of U.S. HIV policy.

Global Health Community’s Response

The global health community has expressed deep concern over these developments. UNAIDS Deputy Executive Director Christine Stegling emphasized that while treatment continuation is vital, prevention efforts are equally crucial to controlling the epidemic. She highlighted that the funding pause has led to the closure of many drop-in health centers and the termination of outreach workers’ contracts, depriving vulnerable groups of support.

The World Health Organization (WHO) also warned that prolonged funding cuts could reverse decades of progress, potentially taking the world back to the 1980s and 1990s when millions died of HIV each year globally.

Conclusion

The U.S. has played a pivotal role in global HIV prevention efforts. The recent funding cuts and organizational changes threaten to undermine years of progress, both domestically and internationally. Restoring and maintaining robust support for HIV prevention is essential to prevent a resurgence of the epidemic and to continue the global fight against HIV/AIDS.

Sources

https://www.reuters.com/business/healthcare-pharmaceuticals/trump-administration-plans-remove-all-members-hiv-advisory-council-2025-04-09

https://www.them.us/story/pepfar-hiv-aids-africa-marco-rubio-donald-trump

https://apnews.com/article/cdc-hiv-administration-for-a-healthy-america-8309109b91e6e4025878f335ea15dc96

https://www.ungeneva.org/en/news-media/news/2025/01/102724/unaids-welcomes-us-decision-keep-funding-life-saving-hiv-treatment

Afonso Freitas

Research Editor &Writer

Friendship and Social Capital

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Human Features as Capital? A brief history 

    In 1776, Adam Smith wrote, in An inquiry into the nature and causes of the wealth of nations, that “The acquisition of talents during education, study, or apprenticeship, costs a real expense, which is capital in a person. Those talents are part of his fortune and likewise that of society”. This idea might seem quite intuitive for an inhabitant of the world in the 21st century, and even the greenest economist would associate these words with the foundation of Human Capital.  

    However, until the last century, this concept was actually quite unpopular. As Theodore Shultz points out in Investment in Human Capital (1961), investment in human is not devoid of moral and philosophical issues. His words, “It seems to reduce man once again to a mere material component, to something akin to property”, are especially evocative, considering the 13th Amendment to U.S. constitution, which abolished slavery, had entered into force not even one century before.  

    With the advent of statistics and nation-level measurements in the period of WW2, researchers started to observe that increases in national output could not be fully explained by increases in physical capital. It became possible to link the accumulation of skills, capabilities and knowledge humans with these unexplained variations in growth.  

    Today, the World Bank defines Human Capital as “The knowledge, skills, and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.” 

    But what aspects of the multifaceted human being are included in this definition? Reading further, the WB specifies: “Investing in people through nutrition, health care, quality education, jobs and skills helps develop human capital, and this is key to ending extreme poverty and creating more inclusive societies.”  

    Human Relationships as Capital  

      After accepting the “capitalization” of individual’s traits, a more recent step has been recognizing that humans are social animals, and therefore, their relationships are a fortune too. The concept of Social Capital generally refers to social relationships between people that have productive outcomes. In a nutshell, Portes (1998) explains it as “whereas economic capital is in people’s bank accounts and human capital is inside their heads, social capital inheres in the structure of their relationships”.  

      Social capital is for sure a peculiar form of capital: it does not reside in any individual entity, but it’s embedded in society, it lies in relationships, it’s rooted in networks. However, just like any other type of capital, it requires investment and maintenance to yield returns. 

      If defining the determinants of human capital is not an obvious task, defining those of social capital is even more challenging. The Institute for Social Capital indicates a range of dimensions including trust, togetherness, volunteerism, generalized norms, everyday sociability, and neighborhood connections.

      In essence, applying this theory, helping an old lady cross the street, having a neighbor who looks after your child when you’re sick, or trusting the police—all of these actions contribute to a web of reciprocity that will eventually benefit either the individual or the broader society. 

      Just as human capital was initially controversial, social capital was—and perhaps still is—a contested concept. For sure, its reputation increased after the publication of Making Democracy Work: Civic Traditions in Modern Italy by the political scientist Robert Putnam. Focusing on Italian regional governments, he found how government performance was strictly linked to traditions of civic engagement.  

      Friendship as Social Capital 

        Within this broader framework, friendship emerges as a particularly powerful and personal expression of social capital — one that not only supports emotional well-being but also shapes long-term economic and social outcomes. 

        If friendship is part of human capital, then it somehow has impacts that extend beyond the individual to society at large. And it might be more powerful than one can think. In a 2022 study on networks and friendships, Raj Chetty’s and colleagues found that education, racial segregation, education, and family structure were not as important as cross-class connections in determining upward social-mobility. In fact, among all observed components of social capital, friendship across socioeconomic lines was the only one driving mobility. Social cohesion and civic engagement, by contrast, did not seem to play a role.  

        The relationship between friends also shapes the social tissue of communities. In Bowling Alone, Putnam describes how American society, one strong and civic engaged, is now degrading through the whimsical metaphor of bowling. The evocation of many lonely bowlers, with a nostalgic comparison to bowling leagues playing together, reflects the individualist derive of society.  From this point of view, friendship and social interactions are a sort of public good, and not just a private comfort. The weaking of these relationships has consequences that go beyond individual loneliness, but undermine the health of society. 

        Relationships and Policy Makers 

          Friendships, connections, networks, and trust — they all contribute to both individual well-being and a healthier, more cohesive society. Yet we rarely hear politicians or policymakers address these topics directly. In an era where society is becoming increasingly individualistic, the case for investing in social capital becomes even more urgent. Urban planning, for instance, can be intentionally designed to promote cross-class connections and neighborhood friendships. The creation of public and recreational spaces that facilitate meeting and incentive people to socialize, promotion of sports and community strengthening activities can be impactful policies for boosting social capital. Reinvesting in friendships and ways of making them happen it’s not just about enhancing well-being, it’s a necessary step to rebuild a strong social fabric, that can sometimes be as important as and educated or healthy community. 

          Sources:

          Chetty, R., (2022). Social capital I: measurement and associations with economic mobility https://www.nature.com/articles/s41586-022-04996-4 

          Goldin, C. (2016). Human Capital. https://scholar.harvard.edu/files/goldin/files/goldin_human_capital.pdf

          Institute for Social Capital. https://www.socialcapitalresearch.com/literature/evolution/

          Putnam, R. D., Leonardi, R., & Nonetti, R. Y. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press. https://doi.org/10.2307/j.ctt7s8r7 

          Putnam, R. D., “Bowling Alone: America’s Declining Social Capital” Journal of Democracy, January 1995, pp. 65-78. 

          Schultz, T. W. (1961). Investment in Human Capital. The American Economic Review, 51(1), 1–17. http://www.jstor.org/stable/1818907 

          World Bank: The Human Capital Project https://www.worldbank.org/en/publication/human-capital 

          Veronica Guerra

          Research Editor & Writer

          The Impact of Donald Trump’s Tariffs on Markets and International Trade 

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          Reading Time: 5 minutes

          Tariffs have always been a contentious tool in global economic policy, and former President Donald Trump’s administration relied heavily on them to reshape America’s trade relationships. Trump’s approach to tariffs was characterized by the belief that they would protect American industries, reduce the trade deficit, and pressure foreign partners into negotiating more favorable deals for the United States. However, the actual effects of these tariffs have been complex and far-reaching, influencing everything from global supply chains to consumer prices. This article explores the potential and actual impacts of Trump’s tariffs on markets and international trade, offering examples, economic analysis, and perspectives from multiple sources. 

          What Are Tariffs and Why Did Donald Trump Use Them? 

          Tariffs are taxes imposed on imported goods. By making foreign goods more expensive, tariffs are intended to encourage consumers to buy domestic alternatives. Trump saw tariffs as a tool to reduce America’s trade deficit, particularly with China, and to protect domestic industries like steel, aluminum, and technology manufacturing. 

          Key Examples of Trump’s Tariffs: 

          • In 2018, Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminum. 
          • In the same year, the administration slapped tariffs on $250 billion worth of Chinese goods, leading China to retaliate with tariffs on American products like soybeans, cars, and airplanes. 
          • In 2020, Trump threatened additional tariffs on European Union exports such as wine, cheese, and aircraft parts in retaliation for EU subsidies to Airbus. 

          How Tariffs Affect Domestic Markets 

          1. Higher Costs for Consumers 

          While tariffs target foreign producers, the actual cost burden often falls on domestic consumers. Importers pass higher costs onto consumers, making everything from cars to electronics more expensive. A study by the Federal Reserve Bank of New York estimated that by the end of 2019, Trump’s tariffs cost the average American household about $831 per year due to higher prices.  

          Example: When tariffs were imposed on washing machines in 2018, prices jumped nearly 12% within months, according to research published by economists at the University of Chicago and the Federal Reserve.  

          2. Disruption of Supply Chains 

          Many U.S. industries depend on imported components and raw materials. Tariffs on Chinese technology parts, for instance, disrupted the electronics and automotive sectors, which rely heavily on Chinese factories for affordable parts. This forced companies to either raise prices or absorb losses, weakening profit margins and investment. In the long run, some firms moved production out of China, but this led to higher transition costs and inefficiencies.  

          Impact on International Trade 

          1. Retaliatory Tariffs and Trade Wars 

          When the U.S. imposed tariffs, trading partners retaliated with their own tariffs. China targeted American agricultural exports, including soybeans, corn, and pork, hurting U.S. farmers who relied on the Chinese market. By mid-2019, U.S. agricultural exports to China had fallen by 53% compared to 2017. 

          Example: The American soybean industry suffered particularly harsh consequences. Before tariffs, China imported about $12 billion worth of U.S. soybeans annually. By 2019, that number dropped to under $3 billion. The U.S. government ended up subsidizing farmers to offset their losses, costing taxpayers billions. (Source: Bloomberg, 2019) 

          2. Erosion of Trade Alliances 

          Trump’s unilateral use of tariffs alienated key allies, including the European Union, Canada, and Mexico. When Trump imposed steel and aluminum tariffs, both Canada and the EU retaliated with tariffs on iconic American products, from Harley-Davidson motorcycles to bourbon whiskey. This strained long-standing trade relationships, particularly within the World Trade Organization (WTO) framework, which is built on predictable, rules-based trade.  

          Effects on Financial Markets 

          1. Market Volatility 

          Trump’s tariff announcements often led to immediate stock market swings. When tariffs on China were announced in March 2018, the Dow Jones Industrial Average plunged 724 points in a single day, reflecting investor fears of a full-blown trade war disrupting global economic growth.  

          2. Sectoral Winners and Losers 

          Some sectors benefited from protectionism, particularly domestic steel producers. However, industries reliant on steel (like automotive and construction) faced rising costs, eroding their competitiveness. Agricultural stocks, particularly in soybeans and pork, plummeted due to lost export markets.  

          Long-Term Economic Impacts 

          1. Reshoring vs. Offshoring Diversification 

          One goal of the tariffs was to bring manufacturing back to the U.S., a process called reshoring. Some companies did shift production, but many opted to diversify away from China to other low-cost countries like Vietnam, Mexico, and Thailand instead. This resulted in a fragmentation of global supply chains, increasing overall uncertainty.  

          2. Reduced Global Trade Growth 

          The uncertainty surrounding U.S. trade policy under Trump contributed to slower global trade growth. According to the World Bank, global trade growth fell from 5.4% in 2017 to just 1.1% in 2019, with tariffs playing a significant role.  

          Case Study: The U.S.-China Trade War 

          The most high-profile example of Trump’s tariff policy was the U.S.-China Trade War, which began in 2018. It involved escalating tariffs on hundreds of billions of dollars in goods on both sides. The conflict led to: 

          • Higher costs for American businesses and consumers. 
          • Reduced Chinese investment in the U.S.. 
          • A reshaping of Asian supply chains, with companies shifting production to Southeast Asia. 

          Ironically, despite Trump’s goals, the U.S. trade deficit with China actually increased in some sectors, as American companies stockpiled Chinese goods before tariffs took full effect.  

          Trump’s tariffs were a bold attempt to reset global trade dynamics, but the unintended consequences were significant. While they did pressure China into signing Phase One of a trade deal in 2020, they also: 

          • Raised prices for American consumers 
          • Hurt American exporters through retaliation 
          • Increased market volatility 
          • Weakened global trade growth 
          • Undermined trust in the international trade system 

          As the world moves with the Trump era, policymakers face the challenge of rebuilding stable trade relationships while addressing the legitimate grievances about unfair trade practices, especially concerning China’s industrial subsidies and intellectual property violations. Whether tariffs were the right tool for this job remains hotly debated, but their lasting impact on markets and international trade is undeniable. 

          Sources

          BBC, 2018; Peterson Institute for International Economics, 2020; Federal Reserve Bank of New York, 2019; Flaaen et al., 2019; Harvard Business Review, 2020; Congressional Research Service, 2020; CNBC, 2018; Reuters, 2018; Brookings Institution, 2020; Bloomberg, 2019; World Bank, 2020; Peterson Institute for International Economics, 2020.

          Afonso Freitas

          Research Editor & Writer

          Regional economic and security cooperation 

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          Reading time: 7 minutes

          Economic Interdependence and Geopolitical Tensions in Northeast Asia 

          Introduction 

          China’s economy exceeded expectations, growing 5.3 per cent in the first quarter compared to the preceding year. Chinese businesses keep growing, after a boom in the mainland, bubble tea chains are eyeing stock market listings as they aim to expand overseas. The pace of China’s post-pandemic development should be a wake-up call for western manufacturers, writes Thomas Hale in the Financial Times. As this economic momentum accelerates, different perspectives on the way to deal with them arise, prompting questions about the role of economic cooperation in fostering interstate peace, particularly in the case of China. 

          Does economic cooperation lead to interstate peace in the case of China? In the differing International Relations theories, there are different approaches to this question; while liberal thinkers argue that the growth of economic interdependence between states can create pressures and incentives for states to pursue peace, realist thinkers have a more cynical approach. 

          An intensive trade culture and strong investment relations often lead to the interdependence of the regions involved and a more peaceful and stable environment. This is the case of Northeast Asia. However, this interdependence may also bring negative effects, such as the trade disputes between China and Australia, which arose from security and geopolitical issues. There are two major developments that depict the dynamic of economic integration and geopolitics of this region: The rise of China and the proliferation of regional trade agreements (RTAs). 

          Differing Perspectives and Expectations 

          As stated before, different theories take different approaches when it comes to interdependence between states and, namely, different expectations and perspectives in the case of the rise of China. 

          Former president of the US, Bill Clinton, a liberal voice, thought that China had to be brought inside the WTO (World Trade Organization) and that it was in the US’ interest to promote building prosperity and partnership with Asia. In order to get the China relationship right, it was necessary to increase the interdependence between the two countries: a more interdependent China would be a more cooperative China.  

          “The world will be a better place over the next 50 years if we are partners, if we are working together.” – Former President of the US, Bill Clinton 

          The realist counterargument against this policy is that the changing power position of China and the US will matter more than economic interdependence and democratic government. According to this approach, China will seek to use its power to expand its influence and control over its region, and perhaps the wider world. The rise of China – and its likely desire to dominate East Asia – will pose a fundamental threat to the United States in the near future. 

          “The best way to survive in this system is to be the biggest and baddest dude on the block. . . Nobody fools around with Godzilla.” – Political scientist John Mearsheimer, (Quoted in Nathan Swire, ‘Mearsheimer explores threat of China’, The Dartmouth, November 14, 2008) 

          Unravelling of China’s rise 

          China’s prosperity acted as an effective boost for regional growth due to the country’s rapid economic and technological growth. Nonetheless, this event also changed the power balance of the region, as China gained competitive power over other countries, ultimately resulting in increasing tensions.  

          The trade between China and the Association of Southeast Asian Nations has been increasing steadily. Since all these countries manage their relationship with China cautiously, this growth stresses the idea that an increased interdependence is highly linked with a sense of peace. Hence, as trade with China is crucial to the economy of these countries, they would avoid engaging in conflicts and anti-China policies.  

          However, and as stated before, this interdependency may lead to increasing tensions between the parties involved. Still following this example, although no government in the Asian-Pacific region has adopted a clear anti-China policy, there have occurred some sporadic anti-China riots in Indonesia, Malaysia, and the Philippines. 

          Proliferation of regional trade agreements 

          The rise of trade agreements, which create rules for trade and investment relations, reduces these risks by providing platforms to solve disputes, ultimately separating economic issues from security ones. In this context, the ASEAN free trade agreement was the pioneer, followed by bilateral and regional agreements. However, since relations between major players, like China, Japan, and Korea did not exist, their economic relations were prone to tensions. 

          Political conflicts and the trade systems 

          Countries often fail to separate their political conflicts from their already established trade systems. For instance, South Korea and Japan are still imposing trade barriers due to the Japanese invasion that occurred many years ago. In other words, limiting trade due to geopolitical issues.  

          A good example of this is the US vs China chip war. In a nutshell, this conflict arises from the US concern that the Chinese army could surpass the US’ (one) in terms of overall power if they have easy access to their chip production process. The chip production process was spread across the US and its allies. Although China has increasingly been settling production centers of its own, a key part of the chip had always to be imported from these countries. This resulted in a series of protectionist measures, in particular, Chinese businesses and individuals being unable to buy advanced chips without a specific license from the US government. 

          On the article “An agenda for regional economic and security cooperation” Yose Rizal Damuri comments that these countries “must do more”. He argues that the key is to address these problems under a regional framework, rather than bilaterally, with region-wide agreements such as the Regional Comprehensive Economic Partnership (RCEP). Meanwhile it is also crucial to address common regional and global challenges together, for example, energy transition. However, these should be complemented by covering emerging issues such as intellectual property and cross-border digital investment. As mentioned in the article, specific common projects increase trust, facilitating conversation on difficult issues and ASEAN may be a key driver of these initiatives. 

          ASEAN 

          ASEAN, which is the Association of Southeast Asian Nations, is an intergovernmental organization that aims to promote economic and security cooperation among its ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The group has played a central role in Asian economic integration, joining negotiations to form the world’s largest free trade agreement, and signing six free trade deals with other economies in the region.  

          Nevertheless, the group’s impact remains limited due to a lack of strategic vision, diverging priorities among member states, and weak leadership. Their biggest challenge is said to be the development of a unified approach to China, since ASEAN countries are strongly dependent on China, and benefit a lot from this relationship. However, this relationship also limits their growth, thus, a balance between the advantages of trading with China and the risks from overdependency should be achieved. The aim of this would be not only to maintain peace but also to pave out a more resilient and sustainable economic future for ASEAN countries. 

          Looking ahead 

          So, what can these countries do? Some argue that the answer is to enhance diversification efforts – They can start by diversifying their trading partners which would mitigate the risks of their excessive reliance on China and would also create a viable alternative for businesses relocating from China. Strengthen trade agreements – An additional way of doing this would be to prioritize the intra- ASEAN trade and integrating supply chains. This would lead to diminishing dependence on imports for components and materials, for example in the sectors of electronics and cars.  

          Besides this, strategic trade relationships with other countries should be considered. This measure would not only grant ASEAN countries a greater access to significant markets such as Canada (for which there are ongoing negotiations to sign an agreement) but also, once again, promote trade diversification. Aligning China’s Foreign Direct Investment with sustainability – Interdependence with China cannot be abruptly broken, and it is important in maintaining peace. Following this rationale, as China’s FDI is important, ASEAN countries should ensure that these investments align with their sustainable growth goals, for example, transparency and accountability. 

          Conclusion 

          In summary, as China tries to steer a manufacturing-led revival of the world’s second-largest economy, the data from Beijing heightens Western concerns about Chinese competition. The opinions on how to approach this rising economy diverge, and the effects of interdependence are bittersweet. While on one side it may lead to peace and stability, since conflict is costly, on the other hand, it also provides room for disputes to emerge.  

          The ultimate consequence of this is the incapability to separate political issues from economic trade. There are many suggestions to address these matters under regional frameworks rather than country-to-country. To effectively do so, these agreements should be comprehensive including emerging potential causes of conflict, like the ASEAN. 

          Sources: Damuri, Y. R. (2022). An agenda for regional economic and security cooperation – East Asia Forum. East Asia Forum Quarterly: Volume 14, Number 4, 2022, 14(4), 5–7, Hawkins, A. (2023, July 5). Chip wars: how semiconductors became a flashpoint in the US-China relationship. The Guardian. Maizland, L., Albert, E., Hong, L., & Galina, C. (2023, September 18). What Is ASEAN? Council on Foreign Relations, Wester, S. (2023, November). Balancing Act: Assessing China’s Growing Economic Influence in ASEAN. Asia Society, XIA, M. (2018). “China Threat” or a “Peaceful Rise of China”? – New York Times. Nytimes.com, Hale, T. (2024, April 4). Manufacturers need to face up to new wave of Chinese competition. – Financial Times, Joseph Grieco, G. John Ikenberry, Michael Mastanduno (2024). Introduction to International Relations- Enduring Questions and Contemporary Perspectives 

          Catarina Franco